AbbVie 2012 Annual Report Download - page 27

binding on AbbVie. The CIA requires enhancements to AbbVie’s compliance program, fulfillment of
reporting and monitoring obligations, management certifications, and resolutions from AbbVie’s board
of directors, among other requirements. If AbbVie fails to comply with the CIA, the OIG may impose
monetary penalties or exclude AbbVie from federal health care programs, including Medicare and
Medicaid. AbbVie and Abbott may be subject to third party claims and shareholder lawsuits in
connection with the settlement, and AbbVie may be required to indemnify all or a portion of Abbott’s
costs.
AbbVie’s compliance with the obligations of the May 7, 2012 resolution of the Department of Justice’s
investigation into the sales and marketing activities for Depakote will impose additional costs and burdens on
AbbVie.
On May 7, 2012 Abbott settled U.S. federal and 49 state investigations into its sales and marketing
activities for Depakote by pleading guilty to a misdemeanor violation of the FDCA, agreeing to pay
criminal fines, forfeitures, and civil damages, and submitting to a term of probation. On October 2,
2012, the court accepted the guilty plea and imposed the agreed-upon sentence. In addition, Abbott
entered into a five-year CIA with the OIG, effective as of October 11, 2012. The obligations of the plea
agreement and the CIA have transferred to and become fully binding on AbbVie. Compliance with the
requirements of the settlement will impose additional costs and burdens on AbbVie, including in the
form of employee training, third party reviews, compliance monitoring, reporting obligations, and
management attention.
The international nature of AbbVie’s business subjects it to additional business risks that may cause its
revenue and profitability to decline.
AbbVie’s business is subject to risks associated with doing business internationally. Sales outside of
the United States make up approximately 45 percent of AbbVie’s net sales. The risks associated with its
operations outside the United States include:
• fluctuations in currency exchange rates;
• changes in medical reimbursement policies and programs;
• multiple legal and regulatory requirements that are subject to change and that could restrict
AbbVie’s ability to manufacture, market, and sell its products;
• differing local product preferences and product requirements;
• trade protection measures and import or export licensing requirements;
• difficulty in establishing, staffing, and managing operations;
• differing labor regulations;
• potentially negative consequences from changes in or interpretations of tax laws;
• political and economic instability, including sovereign debt issues;
• price and currency exchange controls, limitations on participation in local enterprises,
expropriation, nationalization, and other governmental action;
• inflation, recession and fluctuations in interest rates;
• compulsory licensing or diminished protection of intellectual property; and
• potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery
and other similar laws and regulations, including the U.S. Foreign Corrupt Practices Act and the
U.K. Bribery Act.
Events contemplated by these risks may, individually or in the aggregate, have a material adverse effect
on AbbVie’s revenues and profitability.
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